Some Questions to Ask Before Choosing a Cloud Mining Service

12Jun 2015

There is no denying that there are lot of companies in the cloud mining industry which are launched with the sole intention of defrauding their customers, we have had our fair share of experience with such already. Since its inception, Bitcoin has been plagued by scammers that have cost customers millions of dollars and looking at the big picture, this doesn’t just hurt one or a few users for such a service, it hurts the entire ecosystem. What you should get from bad experiences however is knowledge that will help you make better and more informed choices in the future. Below you can find a list of nine questions that you should ask yourself when considering a new cloud mining company, a list prepared by Genesis Mining, one of the most serious cloud mining businesses out there.

1. Longevity doesn’t mean legitimate.
A mining company that is set up as a ponzi scheme doesn’t have to open and close overnight. There is no way for you to pull your money out, so they will keep on doing business long after you’ve realized you’ve been scammed. That means that a company with 10 months of mining history isn’t necessarily legitimate — keep researching.

2. Pics or it didn’t happen.
Datacenters are large operations and you can prove they exist by taking pictures of them. If your mining company isn’t sharing photos of their operation, start asking questions.

3. Look for the Asic endorsement.
If a cloud mining company does real business, then they have had to work with an Asic vendor before. These vendors freely give out endorsements to their customers as a form of self-advertisement. A mining company can easily acquire one. No Asic endorsement should raise red flags.

4. Beware the discounts.
Remember that in the world of Bitcoin mining, margins are everything. A company that is laser focused on customer acquisition by giving out huge referral discounts (anything upwards of 10%) should give you pause. That’s a sign of a dangerous (possibly devious) business model.

5. There should be nothing to hide.
Do you know the people who operate the mine? Are they forthcoming with their identities? A classic sign that you’ve stumbled onto a scam is that the operators go to extreme lengths to conceal their identities. Look for transparency!

6. Do they accept credit cards?
Merchant processing is not easy to get for a Bitcoin mining company. The process can be tedious and involves being attached to a real identity so if they are only accepting anonymous crypto payments, this can be a potential red flag to watch out for.

7. Are they out and about?
Are the founders or staff regulars at events? Are the constantly contributing to the overall growth of the cryptocurrency industry?

8. There are no guarantees.
This almost seems to obvious to say, but it’s been tried before, so we’ll warn you anyway. A company that guarantees you profit from mining is selling you lie. No one can predict what the exchange rate will do or what will happen with Bitcoin next. Guarantees should make you suspicious!

9. If it’s too good to be true…
As the saying goes, if it’s too good to be true, it probably is. Are they promising returns far above anyone else in the industry? While profit is the objective, it’s important to always consider if what they are promising is simply too good to be true.

Do note that these are just some guidelines and a cloud mining company not meeting some of these requirements or a one that meets all of them may or may not be legitimate. Also some of these could be true only for large scale mining businesses and a smaller mining operation may not be able to comply with all of them. So while the above may be considered helpful and useful for ruling out many of the possible risky investments, there are no guarantees, sometimes it is all about the gut feeling you are having when checking out a new service. And one more important thing, as we usually say when we start checking out a new cloud mining service – never invest more than you can afford to loose!

I am not sure about Genesis either.
They got No public mining address / no user selectable pool.
A cloud mining company that wont let you direct the hashrate to your pool of choosing and cant prove its actually mining bitcoins itself, is very likely a scam. There is no reason to hide mining address or not sign blocks. None.

also they got no exit strategy, with ponzis like to do.

I keep saying this; If you want to mine Bitcoins at a trusted cloud platform go for Hashnest.

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